The National Association of Realtors expects a nationwide increase in home prices over the next year, especially in California.
According to the latest results of the Realtors Confidence Index, a monthly survey of 50,000 real estate practitioners, Californians should expect to see home values increase a minimum of 5 to 7 percent this year.
Kris Klair, EXIT Realty Chief Executive Officer and Director of the California Association of Realtors, says prices in the Central Valley and Stanislaus County are essentially stabilizing from the crash, leading to the sudden 30 to 40 percent increase in home values in 2013.
“Less than 1 out of every 7 homes is now short-sale or bank-owned, so we are seeing an increase of traditional sales and sellers are selling up. For example, in the last five years if a house was worth $180,000 to $200,000 maybe now it is worth $280,000 or $290,000. Sellers are bumping up a little bit to $300,000,” he said. “Any buyers will pay that little extra because interest rates are still low.”
Another Turlock Realtor, John Oushana of Atlantic Realty, says “Our brokerage has had several meetings since the beginning of 2014 regarding the local market stabilization and the solid increase in home values.”
“We are seeing first-time home owners who bought a few years ago at the bottom (of the market) now looking to sell again and move into bigger homes. With still very low interest rates, there are still high demand of buyers out there” he said.
Buyers are jumping at the historically low interest rates, which are currently hovering near 4.5 percent. During the boom years of the early 2000s the interest rate was 6 to 7 percent.
In 2013 a shortage of inventory, coupled with the surge in buyers, led to a historic increase in home values which is unlikely to repeat.
“Home buyers cannot afford to have the market increase another 30-40%, as we are slowly seeing that first-time home buyers are being omitted from the market due to the increase in home values. For example, Stanislaus County FHA loan limits have been reduced to $276,000.00 from $423,750.00. Interest rates are still at record lows,” Oushana said.